CANBERRA OBSERVED Mixed budget: 'Battlers' put on the backburner

News Weekly, May 23, 2015

The Abbott Government has clearly learnt a lot since its ill-fated first blitzkrieg budget that was designed to run over as many groups as possible in one go in a bid to fast-track a return to budget surplus in its first term of government.

Joe Hockey

Joe Hockey’s second budget could not have been more different. By contrast to its harsh predecessor, it is designed to help Australian families juggle work, to assist the unemployed back to work, and to encourage small businesses to expand and employ people.

And in the greatest irony of all, there is a particular emphasis on the concept of fairness.

The budget emergency has been dropped but in its place there is now a “trajectory” towards a budget surplus, and all this will be achieved without cutting back on pensions, forcing the unemployed off welfare after six months or the imposition of an unpopular Medicare surcharge.

Mr Hockey’s first budget strategy monumentally failed as either a political or an economic document, with the Opposition performing a superior selling job that convinced the electorate that the budget was unfair and punitive.

This, combined with an uncontrollable Senate that spurned the proposed budget measures, ultimately led to the Prime Minister almost being toppled in a party-room coup in February. Hence the turnaround in budget strategy and messaging.

This time the Government has been smarter in its budget rollout, getting good and bad announcements out into the public domain early, ensuring that all the powerful interest groups such as the Australian Medical Association and the Australian Council of Social Service are on board with health savings and in tightening up eligibility for the age pension.

And even the wealthy dowagers with millions in bank assets, who will no longer be eligible for a part-pension, will get to keep their Seniors Health Card, which provides discounts for prescription medicines.

Finally, Mr Hockey has managed to look less arrogant than the cigar-smoking first-time Treasurer. Instead he is all about measures that will help drive the economy, assist families, and get people working.

Labor will struggle to find areas to criticise the Government this time, especially after the purloining of good Labor policies such as the so-called “Google tax” on multinationals.

Labor’s initial criticisms of the budget via shadow treasurer Chris Bowen are that the numbers don’t stack up, that the Government is going against its own mantra, and that taxes and government spending will remain high.

But there have been downsides.

First, in an effort to win back “working families” and to get more women (read “paying taxpayers”) into the workforce, the Abbott Government has taken the axe to single-income families – the so-called “stay at home mums”.

As part of the Government’s plan to get mothers into work, stay-at-home parents will lose access to child-care rebates from July 2017. While there remains a protection for low-income earners, those whose family income is above $65,000 a year will no longer be eligible for any child-care assistance. Working mothers in families with incomes of between $65,000 and $185,000 will get a $30-a-week child-care boost.

Several Nationals MPs have led an early revolt against the moves to wind back support for single-income families where the mother stays at home to look after the children.

And Daily Telegraph columnist Malcolm Farr said the budget represented a dismantling of the John Howard legacy on family policy.

“The stay-at-home mum, once adored and protected by the Howard government, will be prodded off her pedestal and into the workforce. She will be ‘penalised’, something John Howard said he would never do,” Farr wrote.

“The budget will undo a decade of what have been core Liberal beliefs.”

Unfortunately, the Government’s advisers (who are based in the public service nirvana of Canberra) forget that the 20 per cent single-income family group fluctuates – many have been there, many know they may be back there – and they don’t want to be penalised when they are back there again. It is a larger demographic than the Government realises.

Many women in the cities cannot work outside the home because of transport and school hours, while others make the positive choice that raising their own children is actually preferable to outsourcing that job to an 18-year-old child-care worker.

Second, the budget has few provisions that will enable Tony Abbott to live up to his promise to be the infrastructure prime minister.

As Alan Kohler has pointed out, to get Australia’s economic infrastructure stock back to the 65 per cent of gross domestic product that it was 30 years ago would require spending of $150 billion.

The budget has ignored calls by many leading economists and Reserve Bank governor Glenn Stevens for “investment in quality public infrastructure” to boost lagging economic growth after the mining boom and to reduce unemployment.

It remains to be seen if the budget will put confidence back into the economy, which the Government needs to do to boost its prospects at the next election.